>> thank you very much. >> yeah. >> professor, thank you for being here. >> i'm happy to be here again. >> this has been a fun time. >> sounds like opium. >> two years ago. >> the dow is 12,000 back then. >> green shoots is gone. >> professor, thank you. guys, we will be back here tomorrow. make sure you join us. right now it's time for "squawk on the street." ♪ everybody get up good morning. welcome to "squawk on the street." i'm kelly evans on this wednesday morning with simon hobbs live from the new york stock exchange. carl will join us later. jim and david are both off this week. good morning, sir. >> good to see you. >> futures are under pressured and concerns the fed might scale back the bond buying back programs next month. the dow is down 29 points. we're off the lows of a couple hours ago. overnight in asia, yen was strengthening. look as well, we will follow

what's happening with the nikkei. down 4%. here's what's happening across europe. the bank of england saying it plans to keep interest rates at record lows until unemployment falls to 7% or below. so a mixed trading session. we will have plenty more on that later in the program. also in our road map this morning, disney's third quarter results top estimates but its movie studio takes a hit on the "lone ranger" flop. morgan stanley, facebook saying that video ads constitute a good chunk of revenues by next year. >> shares of ralph lauren are unraveling on weaker guidance. >> dan lobe is backing off sony for now and is telling an angry george clooney they have more in common than clooney thinks. shifting our focus. we were just talking about what's happening in japan. mike, i just wonder again if people, as much as they're talking about how the taper is responsible for what's happened overnight, if it's not in fact some of the things that are developing overseas which are just having an impact here back home. >> it looks like it. i think that to me the big

takeaway is that forward guidance by central bankers seems to be the thing everybody is focused on. in one way or the other no matter what developed market you're talking about it seems to be what's driving the whip here. so i do think that's probably what's going on. to me that's the risk for the u.s. market. it's not so much the real world dollar effects of tapering. but whether, in fact, it causes some kind of mini panic either in the treasury market or the overseas market. >> it does come to something when you have a dovish charles evans saying, i'm not going to rule out a september taper. that really puts it front and center, doesn't it? >> says everybody is on the same page. forced to be on the same page. my take on it, since may, is what's happening is the market is having to adjust from a world whether it's heads, i win, tails, you lose. it's the fed indefinitely helping us whether we need it or not to a fair coin flip where we are doing better but we might not have the tail as a tail win. >> the big question is whether or not we have announcement of tapering is the fact it's the market.

what happens when they finally say it. fall out of bed or can we -- actually the rest of what evans is saying is dovish. he's talking about bringing down the target for unemployment. so below 6 1/2%, so rates, real rates, could stay lower for longer short term. >> i don't think anything that's been so widely anticipated and dissected in advance could not be somewhat discounted by the markets by the time it gets here. >> you've got peter writing this morning, stocks waking up to the taper that the bond market has been pricing in. we've only been talking about this for three months. >> broader context. look, we need an excuse for an over-bought market with kind of complacent sentiment to back off a little bit. august, september, you know, every reason in the world to have a little bit of a pullback. >> it's a signal to sale. >> or excuse. >> does it really matter if the market sales, the question is at what point does it stop? >> exactly. it's hard to say -- it's hard to really asell the underpinnings of how the market is behaving.

on the other hand, if people are calm on this. in other words, every pullback we've had people have gotten bearish and hedged. i want to see that again. if not, go deeper. >> i guess it depends on what your view is of the rest half of the year. goldman was talking about revenues of the s&p 500, if i can find it, rising they thought -- here we go. sales growth 5.4% next year. though they thought the margins might not grow as rapidly. but that is a strong underpinning or should be, shouldn't it? >> if you look at revenue growth as a proxy for, let's say, maybe what the u.s. might do plus a couple of points for global growth. that's not necessarily a formula that points towards stagnation. it's probably in line for what we've seen for the last 12 points. is 5.4% going to be good enough? >> probably because we've amically mated ourselves. nominal gdp is the issue here. globally it's not giving companies the -- the pie is not getting bigger fast enough for them.

it's interesting. this market has basically bridged every period when it should have had a much weaker run. and we basically bridge ourselves to high revenue growth, it's positive. >> in the bizarre world in which we live, if you don't think it's going to grow, as a ceo you're not going to put in massive expenditure and therefore employment stays low and therefore you still have these low interest rates from the fed for years. >> the real concern, this goes back to the labor market the first six months of the year, 200,000 pace but cap exwas lagging, are companies going to say, wait a minute, we can't sustain this pace of hiring or are all the positive cyclical things going to start to kick in. that's why each time we get an important piece of economic information, people go back and forth between this, we love this, we love this, not, kind of thing. >> exactly. let's talk about disney. disney is trading lower. studio or the movie side of the business, their earnings have dropped, mostly due to the "lone

ranger." let's bring in a senior media analyst with stern. looks like the writedown on "lone ranger" could be as much as $190 million. people broadly vastly looking through that. that doesn't seem to matter long term in investors. >> yes. i think people expected their writedown approximately in the neighborhood of what carter had last year. that was $200 million writedown. >> if you look at what loeb is saying about sony, he points to the flops in the movie business and say it's indicative of a dysfunctional organization. why is that not true in your view of disney? >> i think the problem with disney film studio outside of pixar and marvel is they take too much risk. it's a little bit like managing risk in your portfolio. you know you're going to be wrong on some movies but you need to structure it in a way that it doesn't wipe out the whole year.

unfortunately for disney proper, the film studio, outside of marvel and pixar, hasn't been the case yet. hey had write-downs the past three years. >> let's talk about the real bones of the business. on the one hand, theme parks which continue to do well. of course, espn. 8% rise in operating income at the media knelt works. $2.3 billion. are you pleased with what they see there? someone suggesting actually that might look a little bit soft given the timing of the calendar this year. >> yeah, i think if you look at the quarter, i think what is frustrating probably to disney shareholders is that it was a really good quarter for the parks. but because of the pull forward of revenue in the cable network's base because of the broadcasting issues and because of the write-down of the "lone ranger" that will probably overshadow this quarter. and that's unfortunate. >> you know, disney is up -- the stock is up 40% since november. it seems like, you know, all of the leading media stocks have been in favor.

what can the company do or what do you see as far as catalysts in terms of either underpinning the valuation or getting it moving from here? >> well, i think disney is a mega cap in a space that's been favored by t. investors for the past 18 months. so i think just the earnings growth alone and okay macro mack drop will keep the shares going probably because this has been historical and still is long on the pm favorite, wait to get exposure to the space. >>ist just going to say despite the turmoil we've seen in the cable business with time warner and cbs, i think it was lazard, one of your peers over there, saying that the strength of they see in that business could drive 15% upside to disney shares over the next 12 months. is there any reason to back off the bullish espn thesis here given what we're seeing? >> i mean, i think everyone

knows espn is a great asset but it doesn't prevent the stock price from going up and down.es is the number one sportsnet work, i completely agree. >> nice to see you. breaking news we need to get back to hq. brian sullivan? >> simon, thank you very much. according to the associated press, president obama canceled his one-on-one meeting with vladimir putin. the ap citing retribution on behalf of the united states over russia's decision to grant ed snowden asylum. obama will still be going to the g-20. in the jay leno interview last night leno said are you going, will you meet with putin. obama did not address the putin part directly but said, yes, he is still going to the g-20. yes, the president will attend it in st. petersburg, russia, next month. however, the one-on-one meeting with vladimir putin, according to the ap guys, has, indeed,

been canceled. so we'll see if that changes any time soon. but some geopolitical drama right now over edward snowden, back to you. >> strong message to the russians there. morgan stanley raising the price target to $45 today from $37. saying the company may soon launch units that can help boost revenue over the next one to two years. it also happens to be facebook's all-time train day high. if you look at the note this has a lot of to do with the video advertising we're starting to factor into facebook's fi chur. and in this case they're saying, you know that video ad units could contribute 10% by next year boosting total revenue and earnings 10% to 15%. mike, i think people are starting to say they're making mobile work, maybe the skepticism gone there. is that a stretch? >> i don't think that's a stretch that that's exactly the thesis that's coalescing here. what i find interesting si would love to go back and read the initiation reports.

all the underwriters put out after the ipo. in the bull case, in terms of the fundamentals have point to point panned out. in the interim you had this great crisis of faith that the company even wanted to put up numbers or could mobilize to get mobile working. so i do think now all of a sudden it's the biggest media network of any sort and there are you can bolt on anything to it. people are trying to justify. it's still a very expensive stock. they still spend way too much they don't put into their eps on stock-based compensation and, yes, i do think as long as the fundamental momentum is there and ad growth comes through, the stock can work. >> but isn't it almost a result in that way you can believe in management? isn't that what we're now seeing? i can believe that they will leverage $1.1 billion over the future? >> for a certain stretch of time, yeah. >> expensive stock. >> absolutely expensive stock. when are they going to earn $1.50. that's a doubling of earnings and that's if you give them the out of not expensing all the stock-based comps.

>> plenty of high fliers who have only come -- this goes back to the google argument, when they went public. which is was they were incredibly expensive and not making a t lot of money. fast forward ten years and it was a smart buy even at that lofty valuation. >> it was. amazon wasn't making a lot of money, either. >> it's the exception that proves every other rule. what i think is interesting mechanically is you now have this belief growing in social media as a genuine business model, as a long-lasting thing. there's not enough market cap available for portfolio managers to buy. it's just not that big a sector. >> interesting. >> you know, facebook is not that big relative to the size of the company. all the other companies have this sliver out there of public equity and people crowding into it. >> giant advertising play. by the way, your point on stock-based comp, i don't know if we will get to it this hour, but it's resurfacing in the case of zillow. coming up later this hour we will have the live interview with facebook executive dan rose talking about the social network strategy and its plans for new

partnerships. carl will be back for that. also ahead on the program, what hedge fund manager dan loeb is now saying about george clooney and perhaps more importantly sony entertainment. plus, an interview you won't want to miss. we're going to talk with twitter's co-creator on cnbc. be sure to watch carl's cnbc documentary "the twitter revolution" which remeres at 9:00 and 10:00 tonight eastern. we managed to watch a screening last night. it's great. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes!

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aligned in a way that he probably doesn't realize. one thing to mention is that george clooney suggested that loeb knows nothing about the business, the hollywood business. the second question is, why on earth, why on earth would dan ll loeb do an interview with "variety." >> i thought it might be that he thought he had to make friends with hollywood because he -- i mean, initially he said after -- from white house down, you know, when you have those failures at a company like sony that means that it is not -- it's actually dysfunctional. i thought he was on a bit of a pr campaign. if it's, it's through his own vehicle. >> what's interesting though is that loeb's main argument is that sony does not make bad movies. interesting set-up. two distinct businesses. it would make sense to liberate the value of the entertainment business with an ipo. now, sony says we don't want to do the financial engineering piece of it so he will just in a softer way, velvet gloves, issue

some changes. he's playing with house money. stock in u.s. terms was he low 1 when he sent his first letter, over 21 now. he's gotten a bump. see if you can work with management. >> interesting yesterday maria saturday down with ashton kutcher who is here to ring the bell. she's saying to him, look, there's been this clooney/loeb fab. what do you think? i can tell you there's a lot of blow. and that is, you know, so that point -- his point still stands. >> that's right. >> you know, it's not as if he needs to know anything about making movies necessarily to be able to identify that the cost structure there is bloated. >> all he has to know is sony entertainment's margins lags to peers. >> he me just clarify one thing. it is loeb's third point that owns the stake in "variety," not dan loeb personally. now, on shares of ralph lauren, all sharply in premarket. the company reported earnings in line with expectations but lower net income year on year. joining us now with more insight

is stacey, president of sw retail advisers from london. are you in ralph lauren? >> no, i'm not. i'm not studio. you know, ralph lauren here is about 20% of the business. so it's very impactful. and that's been one of the big problems is that the wholesale business, the department stores here in europe, have just not been replenishing. >> stacey, take us through the quarter and what you identify here as some of the main concerns with the shares. >> well, the title of the press release today says better than expected q1 but i think the title should be, ralph lauren is now a back half weighted story. so the issue is is that they came in revenues were up 4% but their holding guidance for the year of revenues up to 4% to 7%, and for q2, they're talking about low single digit increases in revenue. again, you're really talking about a back half weighted story. investors just don't want to see this in this kind of environment.

>> shares down almost 7%. it's interesting because as we started to move through the retail portion of this earning season it's clear this is a market of winners and losers. not surprising given we have a huge increase generally out there but we've seen some of the companies perform really well when we talk about dsw and we've seen others, stacey, i wonder if ralph lauren is one of them getting punished and if there's a market share story. >> i think you also have to point out if you look at coors, that's really an accessory business. ralph lauren is actually just in the beginning of really getting into accessories. there's even potential for stand alone accessory stores so i wouldn't necessarily lump them together. i would also, ganl, they have this big exposure in europe. in southern europe they've been trying to pair down the inventory in those stores. the good news is that in the second quarter we'll sort of normalize all of that noise. so we will really see what you were looks like going forward. but certainly the street did not like the revenue guidance push into the back half and also there's some talk of operating

margins in q2 being down significantly. so, you know, i think investors get a little bit nervous when you hear that. >> you can see that in the shares this morning. stacey, thank you for joining us. ralph lauren trading down almost 7% here after those results. at least that's tind indication. we'll keep an eye on it when the market opens in ten minutes time. also, art cashin is on deck. and exclusive with zil row ceo spencer rascoff. he will have a round-table discussion featuring the obama, talking about housing reform. look at futures which are now down 42%. a leg lower. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection.

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just about. seven minutes left to go before the opening bell. let's bring in art cashin, director of ubs joining us here at post nine. good morning. >> good morning. >> japan overnight had a horrible session. a month or two ago maybe that would have meant a horrible open for us. is that the most important factor at play here? >> well, i think that you are seeing a separation. a lot of people tried to pin it on the tapering talk here in the united states. that's kind of incongouos. the dollar was weakening. if it was tapering the dollar probably should have strengthened. so was the yen going up and the nikkei going down the equivalent

of 650 points? the bank of japan has just begun a meeting. there's some feel that there may be a little bit of pushback to economic s and i think that may be have them worried. >> art, as we've hovered here not too far from the highs a lot of people are focusing on maybe a narrowing of the market, kind of the figures have not held up. is that something you keyed off of here? >> we've listen looking at the same thing. it's difficult we oh the market always makes it tough for you. you can do consolidation that way. readying yourself the next step if top process looks like that. you begin to differentiate. as you point out the breadth isn't quite as broad. if you look at the s&p 500, large number of stocks are not near their highs. so -- >> true. i just want to ask quickly. when we took a leg down a couple minutes ago by 20 points in future, did that have anything to do with obama canceling his bilateral talks with putin?

>> backdrop, it might have. surprise after his appearance last night it sounded like everything was still going to be in order. now you've reintroduced some geopolitical anxiety. is it all about snowden and what's going on or is it somewhere else? ramadan is winding down. that's going to have everybody's geopolitical antenna up. markets are a little nervous here. >> art, thanks. okay. now four minutes away from the opening bell. yesterday the dow avoided closing down more than 100 points for the 26th consecutive session. that's the longest such streak since march of last year, to mark's point he just made. can the blue chips get out of the way today?

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through its initial public offering this morning. pricing below the range, simon. offering about 5.1 million shares. still down here to celebrate and see how those shares do. >> a lot of red on the screen here as we look at the opening bell down at the new york stock exchange. keep an eye on the nasdaq as well. n neoslim is up there. tech company yume. seeing mostly red as we start to get into this session. at the nasdaq, that was neo stem, a developer of cell therapy product celebrating its recent switch. >> if the s&p actually closes below the front lines today, closes in negative territory that will be the first losing streak in two months in a relatively flat range. >> never short of boring tape as people having telling us on the program. >> i don't know if it's -- if this is snuff of a boring tape

to actually qualify. if we do get a little momentum in selg, i don't see it. i do think that we lack any real oomph for an meet push-up. >> keep an eye on, time warner had a nice beat and raised the full year outlook. aol beat on quarterly earnings and announced they're acquiring web video company for $405 million. not a hooinlg acquisition but one to watch in this space. >> for them it's important because tim armstrong was on "squawk box" this morning and he thinks it puts them at the front of ip television and he doesn't feel that enough companies are positioning for that. i think software for advertising. we didn't quite work out to mean what it does but it's important for them. >> say that a about a lot of tech names these days. speaking of advertising, facebook, we were just talking about this one. morgan stanley raising the price target to $45 a share. that would be matching its intraday high that the stock traded at. currently at 38. up half of 1%. the rally that we've seen just since it's been able to start

proving that it can monetize mobile is already -- has already seen the shares rally quite a bit. >> it's been very impressive just in terms of the response to it. people clearly were on their heels. people are saying the shorts were chased out of facebook. the shorts were gone. it's not a heavily shorted stock. long only saying i need exposure to this space. >> doubling the dip this morning if you want to look at that. still macro concerns and those some stock-specific, specific things that have been driving. and want to keep an eye on ibm as well. talk there about what's happening to potentially with some furloughs. there's the shares. off by a third of 1%. ibm lagging by a third of 1%. we'll see what that does for the dow which is currently pointed down 69 points, guys. >> we should mention after the bell, as well. >> couple of big earnings. tesla as well. those shares, up 700% since the, i ipo.

>> $17 billion market cap as well. >> do you believe in tesla? >> i believe -- i believe in it as a february nom phenomenon an. battery life and sales, but, you know, this is a cold name. >> chevy volt, gm just coming out and saying it's going to cut the price of the chevy volt. that was yesterday. all of this as ford, meanwhile, is going the natgas route. i think we talked about this last week. ford sells more f-150s in a day than gm sells voe s volts in a . something like that. it's still a niche market for electric vehicles. >> for now. for now. >> exactly. we will also be speaking with zill zillow. shares down on quarterly results. we'll be talking to the company about the trends that it's seeing in housing. some company-specific issues and, of course, the interview that they've got coming up with the obama. >> huge confusion as to whether they met market expectations or

the stock-based compensation, how they put it in or not. it's 1:00 this afternoon that the ceo of zillow is going to host this q and a with the president himself. just on that news on monday, the stock gained $250 million in market cap, just on that news. so it's going to be a very interesting interview with zillow ahead on the show. >> the obama administration is going to look at housing finance. mike, do you think that this is really going to be moving the ball forward? it's been years and years that we've talked about this without seeing much action. and every time it comes up, it spooks the nbs market all over again. >> it seems to be a light added momentum in that direction me laid out the parameters and principles but what he would like to see replace fannie and freddie. you want to keep the cost of 30-year fixed mortgages low. i don't know exactly whether it's going to get somewhere. >> american thing to have 30-year fixed mortgage. >> it is. >> that's because the public

sector underwrote it. bring the private sector in. they're t not going to underwrite it at that level. >> that's right. and even more peculiar american that it becomes one of the few things that all parties can agree on is that we have to make sure we keep this birth right intact over a 30-year fixed. that's why we have the home ownership rate 25 percentage points above germany's. >> at the same time, by the way, looking at the youth population. a lot of people writing notes about this, taking a look at what's going to happen structurally with demand for housing and demand for credit and some other things the consum consumer credit report will coming out at 3:00 p.m. today. cleveland feds speaking at 1:40 although she's not a voting number. >> just want to mention that walt disney is taking on the chin on the open today. leading the dow lower. >> and again, taking a look at studio cost on that one. let's get to bob pisani now on more of what's moving today. >> i'm standing in front of yume, we priced it at $9.

that was well below the price talk of $12 to 14 drz. the company provides video brand advertising. basically they help advertisers with digital advertising campaigns to make it simple and the point here is we're going to have a very busy ipos in the next two to three days. six or seven other companies are becoming public. seven down here on the nrk stock exchange. a few over on the nasdaq. a lot of companies are going public now which is unusual because august is usually daedsville when it comes to ipos. the stock market is at historic highs. a lot of companies are trying to take advantage of the nice move up in equities to go public, including yume right now. $9 is where it looks to be opening. dow today, first three-day decline in two months right now. you can blame it on the fed talking about tapering in september. we're going to hear from clauser today who is not a voting member. he will reiterate what everybody else is saying. the fact is the markets have been looking tired. we talked about this yesterday.

the leaders like the transports and the biotech are looking very tired right now. the breadth has been poor. new high list has been shrinking in the last couple of weeks. the come play senplacency is hi. the u.s. strength has not been mirrored by any kind of strength over in asia right now. opening 905, yeme. priced at $9 above the $14 was the price talk there. i would be careful about making a lot of conclusions if we end down today. august, thin volume, thin liquidity overall. the s&p 500 is really stretched. we're 10% above the 200-day moving average. that is very unusual. and usually you get a little bit of a pul book when that happens here. three of the four economic reports in july. a lot better than expected. remember that in terms of what's going on. time warner not only beat, raised the full-year guidance. 12-year high. disney let up on the "lone

ranger." parks were good. cash ad sales at espn up 11% in the quarter. even film, remember, there was "monsters university," as far as i can tell, that was a big hit overall. it's down today but the other metrics on it were good. back to you. >> bob pisani, thank you. more with bob later in the program. for now, let's shift to bonds and the dollar with rick santelli with the cmec group. >> boy, it's funny you mention that. wait until you see where all of my charts are coming from, foreign exchange. first, fixed income. we basically set until a very narrow range since the employment report on friday right around 262 to 264. right in the middle. and here we are at the low end of that range, down a couple basis points. open the chart up to july 22nd, you can see how we're flat lining. we're flat lining at an extended yield range. that's the point. foreign exchange. everything you wanted to know know. first, the grand picture. let's look at the dollar index. may 1st.

it is about ready to slip under key levels. 81.5. as a matter of fact, it is, as we're speaking. you want to watch this but maybe glean more information by looking at all the individual parts. may 1st, euro versus dollar, look at the strength there. look at the pound versus the dollar. art cashin talking about it. it's like central bankers going wild. who can keep up with these strategies. foreign exchange market is trying. look at how the pound is zooming here. if you look at the dollar/yen we are loosing significant ground here. last chart is my favorite on foreign exchange. why? the euro versus the pound has been all about the euro. the fact that the pound is now starting to gain traction and we are channel changing, see the way we're starting to dip over the defined channel? that may be the cross trade you want to look at the most. no matter how you spell it or for what reasons, the dollar is definitely under some pressure. remember, second of three options in the august refunding. ten-year notes will be on tap at

1:00 eastern today. simon, back to you. >> thank you very much, rick santelli. ahead on the show, facebook taking a big leap by launching a mobile game platform. up next, we'll have an exclusive interview with the man in charge of the social network's mobile gaming partnerships and, indeed, facebook's acquisitions. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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welcome back. i'm in washington where president barack obama has now canceled plans to meet with russian president vladimir putin in september in moscow. the president saying that he is going to continue his plans to go to the g-20 summit in september but he will not meet with vladimir putin. the white house issuing a statement saying this is due to a whole long list of factors, but they also say russia's disappointing the situation to grant edward snowden temporary asylum was also a factor that we considered in assessing our current state of bilateral relationship. this is a rare diplomatic snub here from the united states to russia and underscores the ang their washington feels over this question of edward snowden and

the fact that he's been given temporary asylum in russia. russia says they're going to allow snowden to stay for a year. what happens to him after that is up in the air very much right now, carl. we'll have to see how that relationship goes. from now, it goes from bad to worse. >> thank you so much. morgan stanley today raising the price target on facebook to $45 a share. the stock hoelgd steady above that $38 ipo price. investors are wondering whether or not the social network stock can go higher by building new partnerships and venturing further into the mobile gaming space. joining us today is dan rose, facebook's vice president. dan, it is great to have you. >> thanks for having me. >> you will oversee everything from developers, gaming, content, m and a. let's talk about the stock at $38. how does that feel back at headquarters? >> well, it's great news for shareholders and employees. you know, over the last year we've really been focus and executing against our strategy.

and i think you can see the results. most importantly, in our mobile revenue growth where, you know, just over a year ago we had no revenue on mobile today. last quarter we announced over 40% coming from mobile. we did that by, you know, really putting our heads down and focusing. none of that changes today. we've always been focus and the long term. that means executing through all the ups and downs. >> even when the stock was under 18, did it get into anybody's head? >> on nehonestly, we are focus d me execution. we need to become a mobile company. that was the strategic push for us. we've always had a mobile product. facebook works better on your mobile device. we needed to become a mobile company, and that's what we've been focused on. >> mobile revenue, $656 million, up 76% quarter on quarter. people want to figure out what caused the spike in mobile ad revenue. >> news feed ads work.

if you look at the way that our ads appear on mobile devices in the news feed, over a year ago we didn't show any ads on mobile devices. we started showing ads in the news feed and advertisers and lots of different categories from mobile app developers who need to get their apps discovered, to local businesses, e-commerce and direct response marketers and large brands are taking advantage of that ad format. >> volume is up. pricing is up. engagement metrics, monetization. people are looking at 50% ad growth -- or ad revenue growth in the first half. and probably something similar in the back half. is that where the company is coming from and are you giving any guidance for 2014? >> i think we're executing well against the strategy of becoming a mobile company and really investing in our mobile advertising products. and you're seeing the results really come from that execution. >> right. but 50% of ballpark number? can the street take that number to the bank? >> we haven't announced a forward looking number.

we're seeing the results of our execution over the last year. and we're going to continue to execute on that. >> everybody is chating at video ads today. morgan stanley upgrade, about the prospect of video ads. a report that you would offer 15-second video ads. any clarity on that whatsoever? >> we've had video ads for a while. marthers from their pages can post videos as part of our promoted post product. we've certainly had demand from marketers to do more. we're explore that. >> a news feed, so you would be strolling through news feed and see ads pop up as you scroll? >> that already exists. if you post as a marketer from your page, if you post a video for a promoted post advertising product, those videos do show up in news feed and we see people engaging with those videos all the time. >> how much is that going to move ad revenue targets in the future? can you get 5% of the online ad market? >> again, we have a product today that's working. we're looking at ways to expand that but we don't have anything specific to announce. >> a lot of discussion about

instagram and to what degree you monetize on that or focus on the user for now. how much time to get people on it and worry about making money on it later. >> instagram is performing well approximately over 130 million people a month on it now. we acquired it a little over a year ago. we're impressed with that team. we launched last week the video product where people can now post videos to instagram, 15-second videos. the first 24 hours we had over 5 million videos uploaded to instagram. a lot of brands and companies are using instagram to reach that audience. and we think that there's a lot of potential. >> there's a lot of social services out there. facebook is one of many instagram obviously as well. we think there's room for a lot of different social services as beam become more and more accustomed to engaging with their friends through their mobile devices and online. >> speaking of twitter we have a documentary on tonight about twitter. a lot of discussion about which one is cooler.

people looking at various metrics on teams. piper jaffray did a survey last fall asking them what is the most important social network. last fall it was facebook, 42, twitter 27. now it's facebook 33, twitter 30. do you see them on your tail? do you see them close that sgap? >> all the data we have shows that our teen engagement has remained steady over the last year. nearly fully penetrate with teens in the u.s. again, i think that there's room for a lot of social services. people are increasingly accustomed to engaging with their friends. nine years ago when facebook got started that was not something that was the norm. nowadays it's definitely the way that people are used to using applications on their phone and online. and we're a leader in that space but there are many others as well. >> gaming revenue. 7%, although i think the company recognizes it differently. it might be more like 11%. people for a while thought gaming -- they thought online games were done, right? now we have candy crush.

how much of that resuscitated that model? >> games have always been -- for new platforms, kind of the first category. if you look at the early days of the pc, early days of mobile, games were the first big category to really get traction. our games, platform, is a desktop platform so the growth is obviously slower than our advertising business. but you do have companies like king in europe building candy crush saga, doing extremely well on facebook, and also on mobile where they integrate with our platform as well. >> do you think that breathes new life as to what zing is trying to do? >> there's a lot of great companies in the gaming space. certainly on facebook we have very big diversity of game developers. and on mobile, you're seeing, you know, hundreds of thousands of games that are being made available. and we're playing a really important role in helping those developers, especially on mobile, get their games discovered because that's a big problem for developer dms a world where there's over close

to a million apps. >> on the conference call, mark zuckerberg talked about home and graph search needing more time, relatively new products. how patient should investors be prepared to be with those? >> i think you want to see facebook is investing in products that are going to be big bets and long-term development and other products like the instagram video, the product that we launched last week which is immediately going to resonate with consumers because it fits neatly into what we're already offering. we continue to see a mix of vinnestment. >> i hate to put you on the spot about your boss but a lot of people worry about sheryl sandberg leaving the company, especially now the ipo price is back. now that you've a good -- home run of a quarter. odds that she leaves in the near term? >> she said that she's not going anywhere. she's been an incredible mentor and friend to me. and i take her at her word. >> dan, it's great to have you. we hope you will come back. >> thank you.

>> a lot going on with the company, with the stock, and certainly with what you're doing with partnerships. dan rose, thanks a lot. when we come back, "new york times" columnist and pulitzer prize winner, author of the book "disney war" plays tonto to our lone ranger and rides along next hour. you will want to hear his perspective when "squawk on the street" comes right back.announ . time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time. the new blackberry q10. "stubborn love" by the lumineers did you i did. email? so what did you think of the house? did you see the school ratings? oh, you're right. hey babe, i got to go. bye daddy! have a good day at school, ok?

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i'm sharon especially soern at the nymex. we're looking at gold prices that are flat. recouping losses that we saw earlier in the session. gold has fallen to $12.71 an ounce and they are watching around $12.75. traders are listening to remarks from fed officials abiliout whe we may seed tapers. that is what is moving gold prices right now. a lot of traders also watching the physical buy, the decline you're seeing there is another factor contributing to what you're seeing here in the gold market. looking at gold that was at a three-week low earlier in the session. we will continue to see if it's able to regain more from that $12.71 level and keep your eye on oil because at 10:30 we are going to get the numbers from

the energy department on weekly petroleum supplies. beth tase from plaks is that we are seeing a decline of 2 million birl barrels. it will be interesting to see where those numbers stand and what happens to oil as a result. back to you guys. >> all right, sharon epperson at the nymex with the latest there. sharon, thanks very much. final thoughts? >> i think the market in general is defensive today. we have a pullback under way. >> you had a tweet about 1982 which a lot of traders said is verbotent you don't mention that. >> i don't say i endorse the view but the pattern, the '09 low, match it up, it looks almost there. that would mean we're in like '86 or something like that. it. >> would be a good thing to be there. >> very good thing but remains to be seen. >> marianne bartolo told us, moving around within the

organization, they're saying, they put out a note comparing the market we're in now to the bull markets in the '50s and as r '80s. >> we got smacked for another 28% before you got to 1982. so it can be any year you want. >> mike santelli, thank you for joining us this morning. appreciate it. >> thanks. coming up on the program, from a confusing quarter release that rot shares to moderating an online housing round-table featuring president obama later today. zillow ceo spencer rascoff has a lot on his plate today including an interview with us exclusively on cnbc. my mantra?

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♪ i've never hurts to open up with some maroon 5. welcome back to "squawk on the street." we start with disney. stock sinking after the movie studio takes a hit. "new york times" columnist is here at post nine to weigh in. plus, zil row plow preparin

host a q and a session with president obama today. we'll talk with the president about how it all came about. weaker guidance, what can be ahead for the rea retailor. the man who invented the hash tag even though he never worked at twitter he will tell us how that story came about later on. starts with the breaking news. president obama is canceling his meeting with russian president vladimir putin scheduled for next month. mick is live with us from washington with more on that. amman, in diplomatic terms, this ises mass i've. >> absolutely, simon, this is a rare diplomatic snub from the united states to the russians. remember the president is going to participate in the g-20 summit, economic meeting that's scheduled for st. petersburg in september. he was also scheduled to have direct meetings with vladimir putin in moscow. that meeting is the one that the white house is canceling today. here's the white house statement just a few minutes ago on why they're doing that. cite a whole long list of factors here.

they also say russia's disappointing decision to grant edward snowden temporary asylum was also a factor that we considered in assessing the current state of our bilateral relationship. now, president obama was on the "tonight show" with jay leno on nbc last night. we do not have the sound bite but i was going to tell you what president obama had to say on the "to tnight show" but he cald the decision for the russians to give snowden some temporary sanctuary disappointing. he also said that there is still, however, some business that we can do, we being the united states, with the russians. so the president said that the relationship between the united states and russia not going very well right now. but he still sees some areas where they can talk. obviously today though, fairly big bombshell in diplomatic circles. simon? >> okay, thank you very much. >> you bet. let's talk some disney. trading lower. third quarter results did beat estimates. movie studios earnings declined

due to the "lone ranger." i want to welcome jim stork to post nine this morning. of course, the columnist with the "new york times." jim, it's great to have you in the flesh. >> dood to be here. >> author of "disney war." you the this company extremely well. seems like every year there's a john carter or a "lone ranger" but the cable business and e zrsespn and theme parks almost make it moot. is that the case this time? >> it is in a large sense. the movie gets a huge amount of public attention. such a fascinating business. but it's never really -- there have been some periods it's done well and then loses money. entertainment is not just a great business. the theme parks did incredibly well. they are amazingly well run and relatively slow growth economic period. tom staggs running it seems to be doing a great job. the cable juggernaut just marches on. as i said occasionally, god forbid something happens to espn. looking long term, well, is the cable business going to get disrupted?

that is a big investor question mark long term hanging over there. the movie business is fascinating. disney has been the major champion of this tenth poll strategy. it's very coherent. bob iger explains it well. there are too many of them. and this is an example of what can happen. >> what about espn? the interests of espn and the major sports franchises are so intertwined at the moment it seems impossible they can break apart. >> well, i think the big question is what will happen if they disaggregate the cable channels? people who -- not that many people actually watch a lot of these big sporting events. you take away the big super bowls, the word series and things like that, the ratings are relatively low. but everybody who is not a sports fan is subsidizing the ads that sports fans will stop their cable subscription if they can't get espn. >> that why the sports

franchises will always come through, someone like espn? locked in together in perpetu y perpetuity? >> the sports franchises are going to go with the money is. the money on cable and espn is coming from the model in which people who are not that interested in sports is i paying for it. are there going to be other competitors who can step in and offer more? yes, you're right, a natural cinergy going on now was because espn can pay the most. but that's what it's about. it's about money. it's not about this sports have an inherent love for espn. >> you almost see that happening now where people are putting together whooshing the programming they want and maybe if they're not interested in espn and taking their costs down to something in the range of $20 a month. you net to thing? like a netflix, a hulu and few other things and you can watch the programs you want to watch and get around the traditional cable model. >> i think we've only begun to see the tip of the iceberg and disruption that's coming to tv

viewing. i'm not an expert but look what it's dawn, dare i say it, to newspapers. it's going to happen to tv. it's going to happen to cable. i have to say for now, the cable franchise at disney has been fabulous performers. you're right, the write off on john carter is fascinating. >> if you were getting into the stock now, iger just extended but how much would you worry about the succession plan there and how much longer he's going to stick around? >> i think they've got good people there and i think iger is a great manager and he's cultivated good people. i'm not so worried about the managementi issue there. i'm more worried about the forces that are beyond any manager. i fee a five to ten-year horizon there. except for extremely long-term people, i think they're going to continue to do well for the foreseeable future. >> we're going to talk more. jim is going to stick around. we've got so much to cover today. a busy day. dow is down triple digits. >> 96 points.

we saw this play out yesterday. we'll see what happens was we move throughout the session. now a big mover this morning, stock down sharply this morning, ralph lauren, that is, after the retailer reporting first quarter numbers. courtney reagan following this story back at hq. courtney, plenty of concerns here for investor, it seems. >> there is, kelly. retailers are just beginning to report the quarterly results. so far, really no clear narrative. others are struggling. this morning ralph lauren posting earnings of 194 a share on revenue of 1.65 billion. both in line with wall street's expectations. now, the hiring retailer also reiterating revenue guidance which is conservative and that's still putting a lot of pressure on the back half of the year for those results to pull through. it's concerning bullish investors bidding shares down today more than 6%. operating margin for q2 expected to be belows last year's record level. largely due to some reintegration of geographic

regions. not really what investors would hope for. analysts expect a growth there. some repositioning of ralph lauren stores in china and renovating some club monaco stores which the company owns. jcpenney dropping the american living brand yesterday did negatively impact sales. ralph lauren primarily an apparel business we know just now expanding into accessories with a new product initiatives plan for the fall. many hoped the accessories expansion will be expand the brand. accessories something to consider after they their strong results. >> a crazy week. worries about coach. worries about american eagle. and now jcpenney. i don't know if you noticed, it's back down to the lows. got to go back to february of 2001 and given the year they've had that is saying something. >> it certainly is. and jcpenney earnings will be out on august 20th. first full quarter under ceo

back for his second coming there. analysts are going to be listening closely to the commentary about early back to school and that's planned for the rest of the year. there is a lot of questions there, carl. >> courtney reagan watching the retail beat. has that been more active lately or what? thank you so much. by the way, quick programming note. the cnbc documentary "twitter revolution" premiers tonight. it does bring us to this morning's "squawk on the tweet." twitter changed the world reducing communication to 140 characters. what should it simplify nek? tweet us at squawk street and we will get your responses throughout the morning. could be anything, guys. >> we love the screening. we love the screening last night. >> screened it last night at 30 rock. thanks. >> good. real good. >> okay. >> sorry. you're looking at me. i'm looking at you. >> left you speechless. >> i know. despite taking a hit today, zillow is up more than 200% so far just this year. and now the company is about this afternoon to host a q and a on housing with president obama

himself. zill zillow's ceo spencer rascoff will join us live to talk about a very big day for them. it wasn't always around but now you couldn't tweet without it. the hash tag. we'll talk to the man who invented the hashtag even though he didn't work for twitter, later on. i'm beth... and i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. ink from chase. so you can. a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers

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estate market, zillow, second quarter results beat estimates but yesterday the company's original press release did not include stock-based compensation sending the shares tumbling. all this as zillow ceo gets ready to moderate a round-table with housing policy with president obama. here in a cnbc exclusive is spencer rascoff, the ceo of zillow. welcome to the program. this is a phenomenal 24 hours for you in many senses. >> it's been a busy week, simon. but it seems like it always is at zillow. >> you closed at a record lie last night and then came out with the earnings report, with the press release. what exactly has gone on because clearly with the stockstill down as heavily as it is, people have huge questions hanging over what you're saying to them. >> well, it was a tremendous quarter for zillow. we delivered a solid beat on revenue, a solid beat on ebitda. we raised revenue guidance for the full year. we're always a highly volatile

stock and we tend not to focus on what the stock does on a day-to-day or week-to-week basis. over the long term, delight our advertisers, the stock price takes care of itself over the long term. >> what happens internally that you made this mistake on the news release? what would you as a ceo now do? will heads roll? this is an unusual error for a publicly traded company. >> well, it wasn't actually an error. it's confusing to compare earnings per share from one source versus another. we delivered a penny per share on an adjusted basis versus a 10 % loss earnings per share to so it was an 11 cent beat on eps but it's hard for people to compare apples to oranges. zillow doesn't trade on eps. revenue growth, we delivered 5 million of ebitda versus a million of expected ebitda and rais raised revenue for the full year. it was a great quarter.

i'm proud of it. >> spencer, it is the case that a lot of companies in your position have used stock-based compensation to get people, retaining talent. it does start to have an impact on performance and certainly on earnings power. can you talk a little by about was this just an issue specific to an acquisition or is this something that is going to be stay with the company? >> well, stock compensation is an important part of the compensation picture at zillow and a lot of other technology companies to recruit and retain great employees. we believe in creating an equity culture. we give all full-time employees stock in the company. most analysts tend to back it out because value in stock compensation is be a. bit of an accounting trick so it's complicated to determine the stock compensation. adjustity generally excludes it. it was a beat on ebitda. putting things on an apples to apples basis is complicated

sometimes. >> let's talk about this afternoon. at 1:00 you're going to host this online discussion with the president himself. i remember when we had our round-table of vintage whole at cnbc, jim harwood was moderating. everybody was psyched. how do you feel going into this and how did you get to do it? our housing analyst here, diana olick, is it appropriate for an ceo in this position to be acting as journalist in this way. how do you feel? >> well, i'm very excited and honored to be able to host this conversation. it will be a half hour discussion with president obama about housing issues. and it's an unprecedented opportunity to connect our audience at zillow directly with the president. it makes perfect sense. when the president is trying to connect with american homeowners, zillow has the largest audience. we have 60 million people that use zillow every month. we're a fantastic platform to connect directly with consumers. zillow has always been about consumer i'm bouempowerment.

today is really the culmination of all that. it's a continuation of a theme that we started zillow with eight years ago. >> spencer, we had you on last time. we talked about what home price have done around the country. you called san francisco bubblelicious, if i'm not mistak mistaken. you must feel that way times two after what kay shuler, for instance, has done in the past few weeks. >> yeah, well, we've actually written quite a bit. we they that they tend to over state what's happening in the housing recovery because the way they count foreclosures homele vas are still increasing quite happen piddly just not as quickly as they would have you believe. >> spencer, coming back briefly to this afternoon. i imagine it's going to be a complicated discussion, given what obama said yesterday on housing policy and the need to abandon fannie mae and freddie mac and trying to get the private sector to support the 30-year mortgage. how do people get involved in

the conversation this afternoon. i think the president himself put out a brief video soliciting questions. >> well, that's been one of the interesting and fun things about this event is just how much the white house and zillow have utilized the media. questions were submitted through instagr instagram, twitter, vine, facebook, with the #askobamahousing. we had thousands of questions submitted and i'm sure more are pouring in right now. common themes from the questions and the topics that we'll likely be discussing include gse reform and refinancing underwater mortgages. zillow's data shows that 13 million americans are underwater on their mortgages and a lot of people want to know how can they refinance their mortgage. >> it starts at 1:00. do you physically go to the white house to -- >> it's not at the white house. president obama will be in this chair with me. i'm in los angeles today. and we'll be here together face to face for 30 minutes and i

will be taking questions from this tv screen that our zillow staff has preselected from facebook, twitter, and from other social media channels. it will be an in-person discussion where we've taken thousands of questions that have been submitted to zillow and i and my team have selected them and i will be asking them in person for the president for 340 minutes at 10:00 a.m. specific. you can watch it at zillow.com/whitehouse. >> are you nervous? >> i am nervous. i'm excited though. it's a good kind of nervous. >> hey, it's good to see you, spencer. thank you for your time. spencer rascoff. good luck this afternoon. >> thank you. automakers are seeing double digit gains this year but tesla's out performing all of them, up more than 300%. could the company's earnings report derail that? we'll get a preview after the break. dow is off 81 points of the three-day losing streaks this year. this one is the second worst.

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the best of performing auto stock this year not gm or ford, it's tesla. reported earnings after the bell but the expectations on the street aren't that good. josh lipton is back at hq. >> the stock has been of course on a tear this year. down this morning but up more than 300%. scheduled to report results after the close today. now, last quarter that was the first time the electric automaker did post a profit. analysts do not expect to hear the same if street is going to be looking for a loss of 1 cents on revenue of 383 million. the focus here for investors as they read through the results today, one, is the company still on track with its goal to deliver 21,000 model s sedans this year. what if any production ramp-up is scheduled through this year

and into thenext. and what is the take rate on the leases for the model s, greater or less than expected. analysts this morning previewing the results for their clients. the team at barclays just published their preview saying that with deliveries on pace in the u.s. and european and asian expansions, seemingly on track, the next key debate around tesla should be around the gross margin development. remember, on that first quarter call management set it expected to reach a 25% gross margin in the fourth quarter. analysts also saying they're going to be looking for progress and process costs and manufacturing efficiency as well as better collaboration with supplierses. simon, back to you. >> thank you, josh. another company a people like to talk about yahoo!. they are changing its distinctive logo for the first time in yearly two decades. but what will the new logo look like? each day over the next four weeks yahoo! will be showcasing different logos on the home page. then on september 4th, one of them will replace yahoo!'s existing distinctive purple

exclamation point logo. logo changed the first modification in 18-year history will be promoted in a 30 days of change marketing campaign. the company has already decide tond new logo but wants to showcase different looks to depict its renaissance under marissa meyer. guys, indicating that it is changing though not clear as to what it's changing into. can you describe yahoo! in 30 words or less? >> jim, do you think they go full word or the "y"? >> as a writer i hate the exc n exclamation point or not. do you put it in there or not? fine, good, put it in there. >> are these things ever a game changer? >> i don't think so. no. they can help marginally. >> while we've got you i want to ask you about squjeff taking ov "the washington post." when you saw that what was your emotion? excites? >> two reactions. number one, from the grand

perspective it made me sad. two things in particular. donald graham said there are all of these gres about the future of newspapers. we don't have any answers. he threw up his hands, we don't know. number two, what really struck me it sounds like he thought deeply about the well being of the institution. he says we think it's better off under another own perp somebody that has more money. that was very sad. fascinating. then the exciting part of it, i think, is yes, there are people with the resources. you know, many businesses lose money. tesla is losing money but they're investing in growth. and if we can get some people with newspapers, with media who have the money and are actually investing -- >> that can't be the answer. >> tribing bezos in a nutshell. investing in growth, not making money. every quarter we ask how much leash are investors going to give him? at amazon and now this? >> they're giving him a lot. he did say there are going to be some changes. i got some new ideas. i don't know what they are but

it's exciting to hear that somebody actually does have new ideas. whether they work or not, he said we can experiment. he can afford to experiment. >> that's what i was going to say is that it's one -- i'm not sure there are ever cases where throwing money at a problem fixes the problem. it's ultimately got to come down to ideas. yes, it's good that he has the capital to back that up. amazon is a company that's been successful baz it constantly is staying ahead of the competition and creating new industry. >> oddly enough, i've never found amazon all that media friendly itself. >> they're not. they're terrible. >> putting that aside, they do what they do extremely well. they admire excellence. i hope that means they want to do journalism at a standard as they deliver those boxes. >> are we saying that newspapers can stand on their own then in the new world? >> i don't think we ought to say that. >> that's the point. >> yeah. and we should clarify again, it's bezos, not amazon. >> we. >> but bezos, amazon, well. >> distinction. straight ahead, he helps

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i'm sharon especially fpper nymex. we are looking at oil prices that are right around $105 a barrel. not much change there as we've seen a decline in crude oil

supplies basically around what some analysts were expecting down 1.3 million barrels. they were looking for a decline of 2 barrels. last night we heard the decline was 3.7 million barrels. we are seeing a smaller decline than what the trade group reported last night. we are also looking at an increase in gasoline supplies of about 100,000 barrels. increase in gasoline supplies of 100,000 barrels. and fuel supplies rose by half a million barrels in the past week. we're also keeping an eye on what happens to supplies in curbing, oklahoma. big decline there. down 2.2 million barrels. we have seen a decline of 5 million barrels in curbing but the supply levels there are still above where they normally are for the five-year average. right now it will be interesting to see if oil prices can stay above that $105 barrel level. that is what traders are watching. there's been a great deal of support for crude oil with the huge decline we've seen in

inventories over the last month. nearly 30 million barrel drop in the last four or five weeks. back to you guys. >> sharon, thank you. as the morkt digests a lot of data, jackie deangeles joins us now with a major industry trend if rise, jackie, of exports of diesel fuel. over to you. >> that's right. hi, simon. analysts are going to dig into the numbers sharon reported to see how diesel exports faired this week. the data for the previous week showed that u.s. exported a million barrels a day of diesel fuel up 140,000 barrels earlier in the month. this is really interesting because the u.s. became a net exporter of petroleum products just two years ago. now, we're the largest exporter in the world. now, major part of that increase has been diesel fuel and it's because there's strong demand for the product, especially in emerging markets. demand aside, diesel margins are higher than gas margins. u.s. refiners have an advantage over foreign counterparts in the processing. there's no shortage of course of natgas to run the refineries and

u.s. oil production expanding, wti while it's over $100 a barrel is still cheaper than brent. let's take a look at the numbers here. as of mid year, margins on gulf gulf produce diesel running just above 16 bucks a barrel while for finished gasoline, they were just under $8 a barrel. that is according to valero. to capitalize on this many refiners have done some simple things to change their product mix. companies like shell, marathon petroleum, valero are expanding the export terminals but valero taking a step further investing heavily in hydro crackers to get gas to diesel ratio to 1-1 in two years. just to give you a little more context on the scope of this, bank of america, merrill lynch, says that u.s. exports doubled from 2007 to 2 end of last year. and of course, patty, executive news editor, she's got a great piece about this with a lot more detail on cnbc.com. check it out, guys. >> absolutely. thanks very much for that. markets having a rough start to the day. the dow down about 85 points.

now, the s&p 500 seeing red for the third day. on that note let's bring in david kelly with jpmorgan funtds. good morning. >> good morning. >> we've heard a lot of people telling us here they're worried about the second half. byron was talking about hits concerns yesterday. what are you doing with client money here? are you citying fully invested in this market? >> reasonably optimistic. plenty of land mines around the world. what we're seeing here is the u.s. economy lightly to pick up in the second half. i don't see any reason to pull away from that prediction. we're seeing numbers out of europe. europe posted the best composite index in two years in july. so seeing some life in europe. japan has been doing better. overall, global economy is gradually doing better and what we still see keeping rates too low and that is still giving yun opportunity to make money in equities. it's still overweight equities even though it's getting bumpy here. >> i'm really interested in this shift in europe and sentiment. do you think europe has really

turned a corner and are you really encouraging people to turn to stocks? >> i think parts of europe have turned the corner. that's the whole problem, is that we're seeing in germany clearly doing better and has very good numbers in production today. and the core of europe is turning the corner. the question is, can that pick-up in europe be strong enough to pull the periphery along to stabilize the situation. there is is a question mark there but the other thing is if you look at the earnings yield in stocks in europe relative to bond yields the gap is enormous. i think european stocks are cheap. given some stabilization, yes, i would be more optimistic in europe than in the last few years. >> david, this is the third time we've had this conversation on europe in the last three days. i want to put one caveat in. once we get through the german election on september 22nd, the politics might get quite hot again and we might have some scares, do you not think? >> yeah. i think the problem is there still is no real resolution or

understanding in europe that they have to help the periphery grow. to me the biggest problem are young people in spain and portugal and greece who just have no connection with the political system and no real reason to believe in it because it's been nothing but misery for them. i think that is still out there. that bomb has not been diffused. the risk gets incrementally less as you see a pick-up in growth in the core. we are seeing. also seeing it in the uk which is also very encouraging. >> yeah. interesting to listen to carney this morning on very early this morning talk about this recovery nation but broadening in his words. are you hearing from clients who say, i want to take away some exposure from japan even from the u.s. and i want to put it to work in europe? are they really saying that? >> i'm certainly not hearing that from the u.s. clients. i think u.s. clients are still sort of dealing with the hole issues of taking advantage of this u.s. stock market rally. i don't hear too much from at least individual investors, retail clients. obviously i understanstitutiona

will being looking at this. but, you know, i think the analysts will catch this one before the investors because the investors have been burned too many times here. >> i wanted to ask you just briefly as well, david, about japan. i realize it feels like around the world in 80 secondses. there's a lot of focus over the fact that the nikkei is down another 4% but the yen is back below the levels that we've seen to blow through just a couple of months ago. what happens next in japan and what bearing does that have on what you do with client funds and the rest of the world? >> yeah, i mean, look, again, japanese stocks are relatively cheap given bond deals locally. but there is a bigger bond in japan in the way than europe. they have got one chance to get fiscal stability through some form consumption tax or fiscal consolidation without sinking their economy in 2014. i think what a lot of people are worried about is the economy either slides back into recession or they don't have the guts to follow through. either of those sent narrows put

them back on the rocks here. so i am nervous about japan. i think relatively ek intoing i like europe. i like the u.s. more than i like japan just because -- it's not that the stocks aren't cheap. >> you want japan to go forward with that sales tax then, is that what you're saying? >> i would like -- oh what i would like to see is a gradual limitation. no need to go from 5% to 8% in w one fell swoop. to do 5%, 6%, 8%, 9%, over a number of years. they have to know they need to fix their budget but the government is not going to do it so aggressively as to sink the economy again. it plays mind tricks with them. when they introduce a sales tax, cause a recession. when they raised the sales tax in 1997 it caused a recession. the people in japan are worried it's going to happen again. >> exactly. they have some reason to be based on that history. david kelly, thank you for your time this morning as we keep an eye on overseas and back here with the dow down 85 points. >> all right. when we come back this morning, the man who invented

the hashtag but actually never worked for twitter. he will be with us later to tell us how it all started. later on we'll talk to one of the co-creators of that platform and they'll tell us what he and fellow twitter creator first tweeted about and how the plans for twitter actually started on pen and paper in advance of our documentary tonight. we'll be right back. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ if you don't have something important to say? "stubborn love" by the lumineers did you i did. email? so what did you think of the house? did you see the school ratings? oh, you're right. hey babe, i got to go. bye daddy! have a good day at school, ok?

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welcome back to "squawk on the street." i'm josh lipton. washing well care health plan this morning, ticker wcg, soaring on heavy volume. managed care services provider reports and beats also lifted the low end of its full-year adjusted earnings forecast and raise its premium revenue projections. that stock up more than 10% right now. up about 40% so far this year. carl, back to you. >> all right, josh, thanks so much for that. in 2007 christmas a developer advocate of google started using hashing to to

introduce his friends over e-mail this led to a tweet suggesting the use of hashtags on twitter. on today's sixth ash tag a aversar. in the twitter verse, he is better known as the godfather of the hashtag. chris, good morning to you. good to have you with us. >> good morning. glad to be here. >> i'm sure you have told this story so many times. could you walk us back to -- people now say, what do you mean, a hashing thashtag, that' sign. >> it's one of those things where in retrospect it might have been the stupidest thing i ever did. part of the longevity comes from the fact that it's so simple. a lot of my friends back in the early days of twitter. first 2,000 user of twitter. wanted to find ways to kind of like getting your signal out of this great channel that was developing. and so a lot of people propose

ideas for different groups with lots of management, you know, you invite members about things like that. things they had seen before in different websites like flickr. it occurred to me in the mobile age when we were tweeting with s and s we needed something more lightweight, something we could just cram into the message that we could put anywhere in our tweet and it would be the way of, you know, joining a group, about some topic. and so i just started doing it. i started putting hashtags in front of my words, words i thought my tweet was about and, what do you think about this? and everybody said it was kind of dumb. >> chris, what's interesting is not so much that that -- that it came about that way but there haven't been more kind of operative symbols in twitter. we have the dollar sign now for some of these tickers. we had the hashtag but frankly, i thought there would be a lot more. i thought there would be ways to indicate sarcasm or don't you sometimes find we're limited by what we can do in 140 characters

not because of the space but just expressing different kinds of things? >> yeah, i mean, we've got the at symbol which is a way to call out different people and that's important. i think the reason why like the hashtag has really been very dextrous over the years is just that it's so easy. it passes what i call sort of like, in my u.s. design lingo, the drunk test. essentially once you've had three or four drinks, you can still kind of operate a hashtag effectively. and that seems to be part of its staying power. >> do not tweet when drinking. anthony weiner will testify to that. >> those are the best tweets. >> one of the things that you came up with, i adore the idea of the drunk test, it appeals to me tremendously. what other ideas have you got for making life better in general, possibly not on twitter? >> besides drinking more, yeah, that's, you know, it's one of those -- i actually tried to come up with other good ideas.

i had this other idea called slashtags, a way to talk to other people that your tweet was kind of towards. but none of those really had the same kind of ability to go wherever your content went. i think the great thing that i'm really prout about the hashtag is that it's not something that's twitter specific. it was borne out of twitter because twitter was a text-based medium but it's all over instagram, it's on google plus, it's on tumblr, it's in my e-mails, it's in my tasks, tools. it goes everywhere is great. >> the probable is you don't get a cut for every time somebody uses a hashtag. >> one time i went to evan bis, twice. i went to south park in san francisco and i was like, guys, i don't know what's going on but i started this thing. people seem to really like it. it's taken off organically. what if you added links on twitter for these hashtags. they were like, it's pretty nerdy. i think they're going to do some machine learning and have some

really powerful ag rhythms. don't worry about it. okay. i guess i'll do my thing over here and you do your thing and we'll see where we end up. i think it worked out for all of us. i then met them probably in the last year at a party, guys, i guess the hashtag thing worked out. i wish i had asked for a nickel every time somebody used a hashtag. yeah, you should have asked for a penny because copper is lot more valuable these days. i just can't win. >> the ultimate compliment may have been, now the fact that facebook is decided it's going to play that game, too and adopted it. i just wonder, in that war between facebook and twitter, chris, as a developer who can look at it arguably from an objective standpoint, who wins the raise and how soon until that race is called? >> you know, i think the thing that's really important to me and always been really important to me is having open competition on the internet. and the hashtag isn't really owned by anybody. perhaps least of all me.

that's why i'm sort of like the hash godfather but it means that i own it or can determine what happens to it. that's kind of the method joy or the thinking around open source philosophy. so when it comes to facebook adopting it, as far as i'm concerned, it's really about helping people to connect, people want to find each other, they want to talk about things that they have in common. and so this is a great tool for doing that regardless of the network that you happen to choose or the network that happens to be most popular during today's social network, you know, popularity contest. >> you know, chris, there are a lot of people who say they would like to make their mark in life. very few at your life who say they have an epitaph already wrin. c written. congratulations, you have written the hashtag. >> weird. >> chris, it's great to have you with us. happy anniversary. >> thank you. >> godfather of the hashing ha joining us today. our documentary about the

platform right here on cnbc. and it's great because we saw the screening last night. in case you haven't mentioned that before. 9:00 and 10:00. still ahead on the program, while talk to one of twitter's creators. he will explain how twitter went from sketch to where it is today. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10.

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santelli exchange for a wednesday. let's get to rick at the cme. rick? >> you know, it's a happy time for me, carl. can you guess why? i mean, think of the stories of the day. of what did the president say yesterday? that basically it is now time to ex tra kat ttricate the governm the mortgage arena. i'm not sure how he's going to accomplish it. i have no objections at all. as a matter of fact, i would like to say i think we're on the same page at least based on his speech. it wasn't only the president, it was other people associated and speaking for the president, in particular gene sperling on the only channel that matters, cnbc, yesterday with maria bartiromo. >> i think that you want private

sector capital to be first. you want people to be making basic market dae signaturesdeci you also recognize for things like the 30-year mortgage, continuing that kind of really liquid, robust mortgage-backed security market we have does mean providing some security for those who perhaps want to take long-term interest risk without the credit risk. >> now, there's so many things in there i agree with. we want to bring private capital and we want it to be first, not the taxpayers' wallet. he aptly pointed out to the criss-cross intersection that caused the disaster, the intersection of interest rate risk and credit risk. i guess the best way to think about that is that, you know, something that the garbage men are going to pick up in the morning should never have high quality credit rating, but no nonethele nonetheless, much of it did. maria really pressed and there were no details. i will tell you what, i think

that american, yankee injean ne ingenuity can always find an answer. hopefully they will look towards the marketplace. remember, we're on the bastion of free markets and all of these pits and all of their contracts are basically intellectual property. they were created. now, are there products out there that can disperse or diversify or remove some of the credit risks? that's what futures contracts do. i did some digging. are there any contracts out that that can accomplish what gene sperling wants to accomplish, eliminate or hedge interest rates separate out from credit risk in a futures environment where all the risk is aggregated? guess what? the answer may be yes. you'll have to tune in tomorrow to find out. back to post 9 at the nyse. >> let's get to josh lipton.

>> carl, we are watching time warner. the stock rising after twx posted a bigger revenue than the street expected. on the conference call also making some news here, the ceo now saying that time inc. spinoff to be moved to early next year. previously expected for the end of this year. that stock up today, up about 36% so far this year. kelly, back to you. >> a positive reaction to the news there. thanks, josh. carl's documentary twitter revolution premieres tonight at 9:00 p.m. right here on cnbc. for this morning's squawk on the tweet we're asking, twitter changed the word by reducing communication to 140 characters. what should it simplify next? we'll read some of your answers when we come back. before global opportunities were part of their investment strategy... before they funded scholarships to the schools that gave them scholarships... before they planned for their parents' future needs

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140 characters, 1,000 calories. >> i'm a little worried about that one. >> windows 8. simplify quantitative easing and the taper. >> it could do wonders for fed statements. >> it practically was 140 characters when greenspan first did it. >> speaking of the fed, do you expect say we get a september taper, will it feel like somebody took the foot off the gas in the car, we all lurch forward? >> i don't think it's going to feel like anything. i think basically the credit markets have already reacted and totally priced that in. we got that lump in may or whatever it was, may, early june. i don't think we're going to notice anything. it will start to taper and it's going to be -- i think it will be a very benign event. >> i wondered when listening to what evan said yesterday, whether they're going to do a deal. they'll announce we're tapering but also move down the target for unemployment. in other words, interest rates will stay longer for lower and you get --

>> you could. they could tweak that. it would be interesting. everything they say, they must watch, watch, watch to see how people react. i think, look, let's keep in mind eventually having some higher interest rates is a good thing for a lot of people. it's a better economy and fixed income investors will be thrilled. finally. may not be so great for a high stock market. >> you're a star down here, jim. we hope you'll come back again. >> thank you. >> if you're just joining us this morning, here is what you missed earlier on. >> welcome to "squawk on the street." here is what's happened so far. >> we are announcing a deal with adapt tv which will make us the number two video player in the marketplace. >> we lowered about $20 billion every other meeting, and that gets them to stop the qe by the middle of next year which was sort of what bernanke said. >> we need an excuse for an overbought market with kind of, you know, complacent sentiment to back off a little bit, but just back off a little bit.

august, september, you know, every reason in the world to have a little bit of a pull back. >> president obama has canceled his one-on-one meeting with vladimir putin. the ap citing retribution by the united states. >> at the opening bell down at the new york stock exchange. >> i think we're executing really well against the strategy of becoming a mobile company and really investing in our mobile advertising products, and you're seeing the results really come from that execution. >> we tend not to focus on what the stock does on a day to day or week to week basis. we're building an enduring system. if we build something great for users and delights our advertisers, the stock price takes care of itself over the long term. >> it passes what i call the drunk test. so essentially once you have three or four drinks, you can still operate a hash tag effectively. that seems to be part of its staying power.

>> good wednesday morning. weaver li we're live at post 9 at the new york stock exchange with the dow having another tough day. as three-day losing streaks go, this is the second worst. we were down almost triple digits, now down 73. nasdaq down 24. s&p is below what some call support at 1687. shares of disney tumbling this morning. the company had a pretty good quarter, but everyone has their eye on that film "the lone ranger" which is expected to lose a record 194 million. shares of ralph lauren tanking after the company's earnings and revenue miss estimates. they posted weak sales in europe and japan. thanks but no thanks. president obama canceled a summit with va lood mere putin over the issue of edward

snowden. we'll tell you what this means going forward. and the revolution has arrived. the twitter revolution that is. you won't want to miss this. we'll take an inside look at the rise of twit we are the company's co-founder in just a couple minutes. plus, is the detroit bankruptcy just the beginning? we'll take a look at state and local governments to see who might be the next bankruptcy and where it might be coming. is your city next? first up, as we told you a few moments ago, the president cancelling a summit with vl vladimir putin over the treatment of edward snowden. eamon javers is live in washington with the latest. >> carl, just within the past few minutes or so, the white house has put out a statement saying that the president now that he's got some time to kill while he's over in europe is going to visit sweden which the white house calls a close friend and partner and obvious jab at russia. the white house saying this morning that the president is not going to participate in this planned summit with vladimir putin, the russian president. he is, however, going to go to the g-20, that's in st.

petersburg, russia. he's not going to have that moscow meeting with put putin, however. among the reasons was the decision to give edward snowden asylum in russia. here is the white house statement. russia's disappointing decision to grant edward snowden temporary asylum was also a factor that we considered in assessing the current state of our bilateral relationship. now, president obama was on "the tonight show" with jay leno last night. he talked a little bit about the tensions with putin personally and between the united states and russia. take a listen. >> i was disappointed because even though we don't have an extradition treaty with them, traditionally we have tried to respect if there's a law-breaker or an alleged law-breaker in their country, we evaluate it and we try to work with them. they didn't do that with us. >> carl, i can tell you, this is a very unusual move in diplomatic circles. once these things are on the schedule, you really don't break

them. obviously, the united states trying to send a very strong message to putin and to the russian public that they don't like what's going on with edward snowden. now, the russians have said that snowden gets a year's worth of asylum there. they'll decide his permanent fate at some point to be determined in the future. the question now is does edward snowden become something of a bargaining chip between the united states and russia as part of their bilateral relationship. that's probably not good news if you're edward snowden. >> eamon, thank you for that. eamon javers in washington. a young man named jack dorsey along with dom sagola were at a start up when they came up with twitter. >> let's create the best experience on the planet. let's make sure people can tweet wherever they are and anyone can see and take action on it immediately anywhere they are in the world. >> it's part of our documentary airing at 9:00 p.m. autopsy

seven years ago dom tweeted, oh, this is going to be addictive. the co-creator of twitter joins us to talk about how far that platform has come. dom, it's agreed to have you. good morning. >> thank you very much for having me. >> was there any sense back then that it would have the reach it has today? >> certainly felt that way to me. i studied hypertext in college and so when i saw this thick come to life, my immediate reaction, tweet number 38 was, oshths, this is going to be addictive, and actually a few tweets later i think the message was already addicted to twitter.com. so i saw it on day one. >> part of the story we try to tell tonight is about the early days and sort of how it had to evolve from this small thing you and jack created to a global entity that's trying to scale, that's trying to monetize. how would you characterize how that path has been? because for a long time it didn't seem like advertisers were ever going to be let in the door. >> i think it's a story of perseverance and simplicity.

it began as something that fit inside a text message which is part of the reason for that 140 character limit. and then it's been a sort of persistent and, you know, constant effort to make it more simple or as simple as it can possibly be, and every day i experience the critique that it will go away tomorrow. but it seems to persist through breaking news. finding a way into people's lives and having some relevance every day in current news. >> and, dom, you're no longer at twitter. you're at chaotic moon now but how is ubiquitous is twitter now still both personally and professional. >> i go and i speak around the world talking about the impact of twitter, how to use it effectively, how to use it for the best good. i think we're still learning to do that as a society. i see it permeating boundaries of nations and social norms.

and so, you know, the way i see it evolving is continuously trying to refine itself not just as a tool but as a means of communication that we share and use in our lingo every day. we just had my friend chris mess see know on here talking about the hash tag. we see people talking about the at reply. i was the first person to ever use the at symbol on twitter. we see twitter adopting the patterns of its users and evolving. >> i wonder as well what happens with twitter because it seems to be a case with a lot of new mediums where they are introduced and they are a lot of fun and there's a lot of innovation and then they settle down and almost get corporate. i wonder if that isn't what's happening with twitter right now? >> i give a lot of credit to the people running the company right now. every time i meet someone who is a quality assurance person for support person or on the front lines, i thank them for keeping our baby alive.

it's one thing to be a part of the creation of something. it's another thing to see it through seven years later. so i give a lot of credit to the team for keeping it as vibrant as it has been. >> man, you got that right. i wonder what you think, too, of -- we talk about how you and i would use it or me and kelly would use it, but you have carl icahn with one of his first tweets. twitter is great, i like it almost as much as i like dell. hillary clinton, bill clinton, the pope. was there a moment where you said that is really a tipping point? >> i think it was when we saw president obama and jack doing the president's first live tweet at the town hall a few years ago. tuning in to the news and seeing him do it with his own hand. it's the lesson of my book "140 characters," to see leaders leading by example, tweeting with their own hand, and those are the moments that won my heart when i see people with

gravitas lending their voice to the system. that's what i imagined right away when i saw this thing being used. >> and finally, when you talk to -- we talked to a lot of young developers trying to do basically what you guys have done. what advice can you give them? do you believe this was all sort of a bunch of different factors dove tailing or can this be recreated on other fronts? >> great question. so, you know, twitter itself was the result of a hack-a-thon, an idea contest. odio, the company we came up with as this idea, was full of amazing entrepreneurs and inventors, and the 14 of us really came together to produce this idea which had the genesis in jack's original sketch but it evolved through all of our input. what i would say is take part in a hack-a-thon. go to one of these events. check out chaotic moon.com for example where we're producing these hack-a-thons on a regular

basis. you will see the effect of innovation in your local town. we immediately after the creation of twitter formed a community call ed ios developer karch which is the world's most prolific hack-a-thon. it's resulted in the creation of square with jack and another friend of mine, tristan and their friend jim. it's led to the creation of things like temple run, things like test flight, things like phone gap or get around, food spotting. so what i have done is taken the pattern of innovation we had and replicated it over the past six years and it kind of became a pattern of innovation and now chaotic moon is doing this as a service. we're trying to see where we can land anywhere in cali, colombia, or anywhere.

>> all these mashed together words and new terms. >> and a huge part of the economy is riding on the success of that innovation in that part of the country. it's just been incredible to watch. thank you so much for your time. >> my pleasure. >> dom sagolla. tonight's premiere of "twitter revolution" got us thinking. twitter changed the world reducing communication to 140 characters. what should they simplify next? we got some good once. tweet us @squawkstreet and we'll get some of your answers later in the hour. tax code is my favorite one so far. this technology has the potential to change manufacturing in america forever. coming up next, we'll take a closer look at what companies are doing with 3-d printing and what that change will mean going forward. first, out to rick santelli.

rick? >> we have the man, one of my favorite op-eds in the last couple months is written by ed and it has to do with gdp. his research is impeccable. it's his conclusions i want to tinker with and i will tinker with the man himself who spends a lot of time in the windy city. hope your pension is not lodged here. all in about ten minutes. >> thank you. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this all-new cadillac ats for around $299 per month or purchase for 0% apr for 60 months. come in now for the best offers of the model year. with fidelity's options platform, we've completely integrated hope your pension is not lodged y filters and strategies...

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3-d print something an

innovation we have been keeping an eye on. we first spoke with the head of the personal 3-d printer company maker bot when they were a small shop in brooklyn. we caught up with them a couple months again when they merged to create a giant in the 3-d printing world. the 3-d print something more than just a cool technology. it's changing the face of manufacturing in this country for good. mary thompson is live in round rock, south carolina, with more. hi, mary. >> hey there, kelly. you know, it's been around since the 1980s, but you could say 3-d print something really having a moment thanks to better software, cheaper machines, maybe even a recent plug by the president in his last state of the union. a far cry from your father's printer, these machines build by an additive rather than subtr t subtractive process. it's layered to create finished products using layers, electron beam, and other things. here is the ceo of 3-d systems.

>> it's going to change how we create, what we make, where we manufacture, how we educatie ou kids and how we learn. >> what's the result? something like this. this component is used in heating and cooling a jet engine. note, it's a single unit. there aren't separate screws and nothing has been soldered on. also take a look at this right behind me. you might recognize this. we're going to be checking on this over the next couple of hours. this is what ink jet is being put onto plastic. it's going to look a little different. we'll have that for you later in the day on "street signs." right now 3-d print something a $2.2 billion industry having seen growth in excess of 24% in each of the last three years. making prototypes is the biggest market, but the fastest growth is in machine that retail for under $5,000 and are sold to

consumers. bigger machines are used to build complex components. ge is the first to feature components made by this time saving technology. >> in a conventional world that might be as long as weeks or months before that first part could be produced in physical form. but with 3-d print are or additive manufacturing, especially using the laser process we're using here, we can go from that digital definition to the actual finished production part in hours or even just a day or day and a half. >> and north estimates that saves ge about 50% to 70% on costs. keep in mind 3-d print something not a one-size-fits-all for manufacturers. basically it's best used for low volume products or highly complex products in areas such as medical devices or aerospace. not in high volume production

such as automotive. the stocks in this space have been a tear. we'll look as to whether or not they're in a bubble coming up on the halftime report. >> talk about changing the world, mary. thank you so much. our mary thompson today. groupon shares are up 77% year-to-date. when was the last time you thought you'd say those words. the company will report after the bell and we will talk to the co-founder and co-ceo eric lefkosky. when we come back, you always want to hear what this man has to say about the state of the economy. former council of economic advisers chairman ed lazear is next with rick. [ male announcer ] come to the lexus golden opportunity sales event

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let's get to rick santelli in chicago with a very special guest. hey, rick. >> hi, carl. i'd like to welcome ed lazear. part-time chicago resident, full time great economist. welcome, ed. >> thank you. >> i really enjoyed your piece last week about gdp, and one of the issues that you raised was it's really a poor indicator of the future. can you dig down on that a little bit, please? >> sure. there are two reasons for it. first of all, it's actually a poor indicator of the current situation. the number that we get tends to be revised over and over again, and it's revised significantly. so last quarter we saw 1.7% growth. typically that could go up or down by something like 1.2 percentage points. we could be talking about last quarter having been a 3% quarter or last quarter having been a half a percent quarter. for that reason you know that gdp number is noisy. but more important things that are going to happen in the future are not necessarily reflected in this quarter's gdp.

that's why the market is a better indicator. let me give you an example. let's suppose we knew that something new technology, fracking, for example, is going to take off in the future. well, you know, the market is going to see that. that's going to be capitalized into current prices because people are going to be investing based on that, but it doesn't show up in current gdp. it will show up in future gdp, it will show up in the market right now, but it won't show up in current gdp. and for that reason the market tends to be a better forecaster of what's rappihappening in the future. >> i have a lot of suits and i don't want to gain too much weight because they won't fit. in your gdp analogy, that's basically a report card. i weigh myself every day, and i do various things to try to keep my weight down. what the scale says is a lot like gdp. it's a report card. it is important. it gives you a summary of everything you have done to control your weight. it might be a horrible predictor of the future but i think it's

essential. second issue, i totally agree, the market is the best purveyor of aggregate knowledge. the problem is, think a-rod, think sammy sosa, i think the market is juiced, juiced! so under that scenario, what is it really telling me? i don't know if when i look at the board and see 15,000 plus on the dow, should it be there? >> i think that's right. look, no one thinks the market is a perfect indicator of either what's happening in the future or even what's happening right now. i mean, even the people who believe in efficient markets to the extreme i would say would certainly take your point as being relevant, namely that the market doesn't always get it right. the question is, is the market the best unbiased predictor of the future, and i would argue that it is. not so much that it's a perfect predictor of the future, but if you have to rely on one thing, the question is do you really o your scale or on something that's telling you about the future.

in the analogy you just put forth with the scale, the scale is accurate. when you look at your weight, it's a pretty good indicator. it's not off by much. the problem is that the current gdp numbers tend to be off by quite a bit. that's not a fault of the government bureaucrats who put those together. they have a difficult job of having to get those data out and get them out in a timely fashion. the problem is that the information isn't all in when they report those numbers and they revise them and revise them appropriately. but by the time those revisions are out, you know, the future is already passed. that's really the problem. >> i want to ask you a very simple question. if ben bernanke could go in a room and he could go boink, and all these fed programs disappeared, do you think he might consider that choice? >> i think he would. i think he would want to do it in a gradual way simply because knowing ben, and i know him quite well, obviously we worked together when i was in the government, ben is a guy who -- he's not an erratic person.

he's someone who tends to be very measured, and i think he will be measured -- >> in my opinion i have never met anybody in the marketplace that thinks his heart into the right place but that doesn't mean there isn't room for philosophical disagreement. >> i expect to see tapering, not because the labor market is better. in fact, if you look at ben's comments to congress a month ago, what he said was, we understand that the unemployment rate is not a very good measure, particularly when the labor force participation rate is falling. so, you know, i think he understands that, but i think they'd like to taper. >> ed, it's been a pleasure. thank you for taking the time to visit the great cme. carl and the gang, back to you. >> thanks very much for that. coming up, detroit became the biggest municipal bankruptcy in u.s. history. we have all been wondering who is next. we'll take a closer look to see if bankruptcy is coming to major city near you. just a couple minutes left in europe's trading day. the bell is about to sound across the continent. we'll have details on the close

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the fact that the data is good. german industrial production was phenomenal. up 2.4% in just one month. you could debate the figures, maybe they're an oddity. the bank of france suggested that country would grow just 0.1% in the third quarter. come back to more central bank action in a moment t. the insurers really stand out. the ing will still sell its european insurance unit. you see the other insurers are higher. the other bit of news, canada's mark carney bowed to pressure from the british government. he came through about some stronger guidance. he says rates in the uk will not rise from their super low level until unemployment falls to 7% in britain. now, unemployment is currently 7.8%, and the bank's own forecast don't indicate it will fall to 7% for three years.

and that's as long as they're forecasting. so no rate rises for three years. well, maybe not. the market having sent the pound down, sterling down, then you can see rocketed higher, and interest rates are higher in the uk, market interest rates because they believe the uk economy will recover more rapidly perhaps than the bank of england's forecast and, therefore, rates will rise sooner than three years out. we'll see. back to you guys. >> thank you so much, simon. let's get a check on energy and commodities. sharon epperson at the nymex. >> hey, carl. oil prices just broke $105 a barrel for the wti, the u.s. oil price, and that probably has a lot to do with the fact that traders were expecting a larger decline than what we got. the decline we saw, just over 1 million barrels, was far less than the decline reported by the american petroleum institute and it was less than what analysts surveyed had expectexpected. we are looking at further

weakness in oil prices. another factor may be the weakness we're seeing in refined fuels, in gasoline and diesel fuels. we have seen those futures prices decline after we got data that was not what was expected in terms of the energy department's report and there, of course, we saw supplies actually rose in the last week. keep your eye on gold as well because gold has recovered a bit from earlier losses and we're looking at gold price that is are above $1,285 an ounce. the weakness in the dollar may have something to do with what's happening to gold, but also traders are looking at that forecast from the bank of england, and they're also watching, of course, economic data here in the u.s. to figure out what will happen in terms of interest rates going forward in terms of tapering of quaun at this taf ea-- quantitative easi. >> we'll keep our eye on gold today. let's get to julia boorstin with breaking news for us. julia? >> carl, the battle between cbs and time warner cable over fees continues. just now cbs has issued a -- what they call a case study on

time warner cable and rates fees pointing out in los angeles time warner cable is on the other side of the table. what they mean is they describe time warner cable as charging what sounds here like an exorbitant amount for fees. they point out that half of l.a. lakers games used to be free before time warner outbid everyone for the rights for $3 billion. then they say time warner cable created a lakers channel charging subscribers $4 a month. this works out to $49 per subscriber, nearly $1 a game. they then describe the similar scenario that happened with the dodgers channel, and then they also circulated as an attachment the class action lawsuit that's been filed against time warner cable for not offering the lakers or the dodgers channels to consumers on an a la carte basis. carl, what this is really about is cbs trying to show consumers that time warner cable is the one that's not being reasonable in these negotiations, and this

battle is just going to continue for a while. itch heard no word of the two parties getting back to the negotiating table. >> you must have whiplash from watching these responses go back and forth, julia. >> it's pretty intense, yeah, pretty intense. >> julia boorstin in los angeles. dow is it down 78. bob pisani is here. >> we're down three days in a row and the usual doomsday, my heavens, no one has ever seen three days down. tops, head and shoulders, the technicians are going crazy. it's august, we have thin volume, thin liquidity, and we're at record highs and we're rolling over just a little bit. i want to put up a chart i put up for you way back in was it may? i think it was in may. we were at a very unusual situation. the market is really stretched. now, why is it stretched? well, because let's just go and say it's stretched. here is how stretched it is. we are about -- this is the 200-day moving average for the s&p 500. we're 10% above the 200-day moving average. that is a very rare occurrence.

the last time i pointed this out was back here. it was may. it was the exact same situation. the s&p was 10% above its 200-day moving average. what did i say? i said the same thing. it's very unusual to have this happen, and often usually you get some kind of market pause when this happens. that's exactly what happened in may. the market paused. you see what goes on here. i'm not predictle it wi ling ite pattern. we're in a thin liquidity period. nobody should wring their hands if the market starts moving sideways or even down a little bit. let's look at how far we are from the historic highs. it's the transports that have been weakest recently. a little rolling over in the airlines today. robinson had earnings that were a little below expectations. other than this, look, the s&p 500 is essentially 1% below its recent historic highs. there are some other one that is have moved a little bigger than that. biotech is a big market leader. we are all interested in what's going on in that group, and here we're maybe 4% below the

historic high that was just there four or five days ago. take a look, however, some things are worse. home builders hit their highs way back in may. we're a good 18% now below the historic highs. there's an old market leader that's just failed right now. largely because of concerns about higher interest rates. let's move on, i want to show you what's going on on the daily basis today. one big problem is the u.s. is moving, but the asian funds are not moving. so we're hitting new highs, but asia is doing nothing. we're not getting any follow through from them at all. once again today in japan, in taiwan, and korea, we had stronger yen and that seems to influence virtually everything at this point. so what do we have right now? let me move over here. the important thing is we have thin volume, thin liquidity, record highs, and a very, very stretched market in terms of where it traditionally moves in relation to its moving averages. i wouldn't be surprised to see sideways to slightly down for the next several days and maybe several weeks.

i don't like to make market prognostications, but everything about the market right now argues for that, plus the thin information we're going to have. >> it's just remarkable we're back to those late may levels that you mention when you look at valuations. >> it's a very simple indicator to show how stretched the market is. when you get 10% or more above that 200-day moving average, you usually get some kind of pause. the rest of the market catches up. >> thank you, bob. turning to munis, is new york city the next detroit? as his last term winds down, new york mayor michael bloomberg has warned about rising pension and health costs. here to share his thought on the state of new york and other cities, lawrence scott. lawrence, welcome. >> nice to see you, kelly. thanks for having me. >> we're starting off with new york because we have a mayoral race looming and a lot of people aren't happy about the candidates and saying this isn't a time to be fooling around with

the city's fiscal position. where would you put when you sit back and look at new york and look at detroit and some of these other major cities, how much urgency is there for reform? >> well, reform, it's an interesting concept. as you look at cities, municipalities, states, what strikes us as long time participants in this market, we've been at this for a dozen years, six years since we formed fundamental, is the diversity among credits. so, no, i would answer your question, new york is not the next detroit. the differences among credits in our market is pronounced, and so new york is not only not detroit, but it's not illinois and it's not puerto rico, and what we think investors are now clamoring for are investment visors and other vehicles by which we can differentiate among disparate credits. and that really is what's interesting in our market today. >> because what didn't happen -- if you look back, the muni market has seen massive outflows, historic outflows going back to what we were just

talking about. people have just been piling out of this space. >> and it's interesting, in the face of that, our investors are i won't say piling in, but they're certainly becoming more and more attracted to what it is that i have just been mentioning, which is a sense that muni credits are different and yet there's opportunity, and finding that opportunity in difficult times, in challenging times, is attractive, certainly to institutional investors and increasingly to retail as well who being in a long only static investment vehicle is less and less attractive. >> you make the point that the investing base in munis is getting more and more homogeneous. do you mean more and more institution? >> no, more and more retail. 80% plus -- it's a $3.7 trillion market and about 80%-plus of the market finds its way to retail and proxies for retail which are the big bond funds. so they move technically all at once. all to sell as we've been seeing

recently and often times all to buy. >> so how can the retail person protect him or herself. a lot of people are going, i'd rather just not be exposed until i feel more comfortable with the space. how can they educate themselves? >> well, there's lots of different terrific options actually out there. for us, we focus on credit. we focus on the underlying worth of the assets and securities that we invest in. and so that's one alternative for sure. but there are others. what i want to say is muni credit as a whole is very, very safe security class. 98%, 99% of the market, a $3.7 trillion market, holds to maturity and it's fine. what you do see though is mark to market risk. so when you see these outflows, folks will see on their statement waning values, and a good discipline might be not to

be reflexive or reactive. >> professions als in the space are worried. the way it's handled in court will set a major precedent for what other cities do, whether they follow in step. >> you know, we've been watching detroit for years really. and it's going to be very interesting. we just helped a group of creditors and ourselves come through the jefferson county experience. and so we do see actually some terrific precedent from that. respect for an asset-backed security like the water treatment facility and we also have a water treatment facility in detroit which is an asset-backed structure. here in detroit we have pension obligations versus general obligation bonds. it will be very interesting to watch that play out through the chapter 9 format, but i will say that chapter 9 was very valuable to birmingham and to jefferson county, alabama, and you see today "new york times" talking about -- am i allowed to mention "the new york times"?

>> you are. >> talking about birmingham getting back on its feet. we want to help detroit get back -- >> but is chapter 9 working too well? will cities be too eager to do this? >> each of them are unique. you won't see i don't think a rush to the chapter 9 forum much like you wouldn't see a rush to -- >> any bankruptcy you'd hope. >> lawrence gottlieb, thank you for coming to share your thoughts. >> thank you, kelly. thanks, carl. you hear a lot about people buying in american, but in this country truly american products can be kind of hard to find. not for our own jane wells. she's live in los angeles with more. morning, jane. >> a glue stick and a toilet seat. one is made in america, one is not. we will tell you along with whether americans care and how much more some would be willing to pay to see that little thing there that says made in the usa. that's after the break.

she's live in los angeles with there that says made in the usa. she's still the one for you - you know it even after all these years.

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f-f-f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better. we're taking it one day at a time. one day at a time. [ male announcer ] see how the duck's lessons are going at aflac.com coming up on the half, stocks set for their worst three day stretch in two months. is this the start of a midsummer swoon or your chance to buy? zuckerberg, hastings, musk, whose stock would you bet on today. green mountain is up yet two brothers can't see eye to eye on the stock's next move. a big debate is on the way. >> every day is a big day on

your show. this week we've been looking at the state of manufacturing. what are american consumers actually buying? truly american made products can be hard to find, so we september jane wells sharing the screen with a toilet seat on a mission. >> you know what? i'm not letting go of it. it will be a permanent part of my office now. you will be glad to know the toilet seat is made in the usa. the glue stick is made in china. finding out where something is made requires patience and really good glasses. tortillas made in the usa. these fake eyelashyelashes, mad indonesia, sri lanka, or china. when we went shopping, we found a few surprises. shopping these days is like going to the united nations. pakistan. china. usa. do we really care where most

things come from? made in america. made in thailand. made in canada. nearly half of americans say they'd be more likely to buy a product if it was stamped made in the usa according to a survey. 60% tell "consumer reports" they'd be willing to pay an extra 10%. >> made in the usa. made in the usa. do we even know what comes from the u.s. and what doesn't? home depot gave us free rein to check. >> a lot of sexy stuff is what's usually made in the u.s., lumber, concrete, drywall. on the other hand, almost all the light fixtures are made outside of the country. this is china, china, china, china, and china. black & decker, an american company, made in china. dewalt, made in mexico.

milwaukee, made in china. toilet, made in china. toilet seat, made in america. over at target -- china. how cute is this? the chain says sources practices are calls changing to balance quality with price. this is interesting elmer's glue, the glue is made in the usa, the glue stick is made in china. for the party, the plates are made in the u.s. the happy birthday crowns are made in china. pinata from mexico. made in the usa, and somehow that comforts me. just out of curiosity, these are made in the usa, too. and barbie, the all-american girl, is actually made in china. all right. barbie may come from china, but one thing in both target and home depot, the american flag, still occasionally made in the usa. 43% of americans over the age of

65 would definitely buy something stamped made in america. the percentage though fell by more than half, guys, to only 20% for people ages 18 to 29. back to you. >> jane, i'm just relieved that pinata was in fact made in mexico. >> but the tortillas made in l.a. >> although that's just as authentic these days. jane well was a look at where things in the grocery store or the department store, pretty much in any store, carl, are coming from. >> that was a great piece. >> thank you. facebook and twitter may be rivals, but they find common ground on "squawk on the street." we'll show what you we mean by that when we come back. (announcer) at scottrade, our clients trade and invest exactly how they want. with scottrade's online banking,

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earlier today we were joined by dan rose, the vice president of partnerships over at facebook. basically the third in command. want to hear what he to say on going mobile. >> if you look at the way our ads appear in the news feed, over a year ago we didn't know show ads on mobile devices. we started showing ads in the news feed and advertisers in lots of different categories from mobile app developers who need to get their apps discovered to local businesses, e-commerce and direct response marketers and large brands, are all taking advantage of that ad format. we have very big diversity of game developers and on mobile you're seeing hundreds of thousands of games that are being made available, and we're playing an important role in

helping those developers, especially on mobile, get their games discovered. that's a big problem for developers. >> a lot of people worry about sheryl sandberg leaving the company especially now that the ipo price is back, now that you have had a home run of a quarter, stock up 50% since reporting. odds that she leaves in the near term? >> she said that she's not going anywhere. she's been an incredible mentor and friend to me. and i take her at her word. >> also on this sixth hash tag anniversary, we were joined by the co-creator of twitter, dom sagolla. here is how he sees twitter evolving. >> it began as something that fit inside a text message, which is part of the reason for that 140 character limit. then it's been a sort of persistent and, you know, constant effort to make it more simple or as simple as it can possibly be, and every day i experience the critique that it will go away tomorrow.

but it seems to persist through breaking news, people's -- finding a way into people's lives, and having some relevance every day in current news. the way i see it evolving is continuously trying to refine itself not just as a tool but as a means of communication that we share and use in our lingo every day. we just had my friend chris messina on her talking about the hash tag. we see people talking about the at reply, which actually i was the first person to ever use the at symbol on twitter. so we see twitter itself adopting the patterns of its users and evolving this new means of communication. >> definitely changing our jobs, kelly, and a lot of other people's jobs and lives, too. our documentary tonight, "twitter revolution" ars at 9:00 p.m. eastern, repeats at 10:00 p.m. >> we saw bits of this last night. we saw the whole thing, but the premiere or the screening or whatever that we went to, what i loved about it as well was the amount of work it took to recreate scenes out of boston,

what was happening in bahrain, the way they have used it over there. then now the nba is using it and some of the comments that dick costello were making when it came to their own plans for an ipo. as carl said, the documentary twtion twitter revolution" premiering tonight at 9:00 p.m. eastern. twitter changed the world by reducing communication to 140 characters. what should twitter simplify next? tweet us, your last chance to get the responses in, and we will air the best ones when we come back. les event to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪ this is the pursuit of perfection. it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing. and exciting.

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tweet time. our documentary "twitter revolution" premieres tonight at 9:00 p.m. posed the question for us, twit ser changing the world, reducing communication to 140 characters. what else should it simplify in katy tweets, lines at the post office. that is a good one. ben writes, job interviews. greg tweets, my 60 minute daily p90x workout. as someone who is about to go for a very long run, right, kel? >> hopefully. you sit here and you start to lose feeling in the feet after a while. >> yeah. >> obviously, what strikes me is every day there's been a

disappointment somewhere, particularly this week in retail, american eagle, ralph lauren today adds to concerns. >> the whole idea it's about the taper talk, this is a market that's looking for excuses to sell. the question is whether it will turn things around later in the session. >> we'll get through august eventually. let's get back to headquarters, scott wapner and the halftime. thanks very much. welcome to "the halftime show." four hours to go until the close. on the wall is where we stand on the street, down day across the board. dow is down almost 80 points. there's the s&p and nasdaq following suit. here is what we're following. u.s. against the world. the best place to invest on earth, your money right now and why it might not be here at home. still brewing. green mountain is up nearly 250% over the past year yet two guys in the same family can't agree on where it goes next. that means they'll square off in a big der bait just ahead. first, our top story,